To the scoreboard:
Dow: 20,938 +43 (+0.21%)
S&P 500: 2,398 +4 (+0.18%)
AUD/USD: 0.7479 -0.0001 (-0.01%)
ASX200 SPI futures (June contracts – 20 minute delay): 5,782 +11
Iron ore benchmark 62% fines: $US62.00 -$US1.19 (-1.88%)
1. Wild night on forex markets: There were some notable swings on currency markets overnight, with the euro briefly hitting a 6-month high against the greenback overnight before falling back below $US1.12. Despite that, the theme of growth in Europe is gaining momentum, and traders will be looking for the euro to consolidate in a higher range after a week of strong gains. The US dollar index started lower but battled back, finishing up by 0.4% as US 10-year treasuries rose by 3 basis points.
There was more good data from Europe, with composite PMIs (services and manufacturing) holding at a 6-year high of 56.8, while business confidence in Germany hit a record high. That wasn’t quite matched in the US, where new home sales missed expectations.
2. Markets stay calm: US stocks ignored the weaker data though, edging higher along with European markets. The UK index fell in the wake of yesterday’s attack in Manchester. On the local market, ASX SPI futures traders have again bet on gains in today’s session off a lower base, after falls in the financial sector (which makes up 25% of the index) dragged on the index yesterday.
3. Data today: In Australia today the ABS has preliminary data for March construction work completed, and the Westpac leading index showing the likely pace of economic growth. Overnight, the US Federal Reserve will release the minutes from its May meeting. Traders will be looking for confirmation that the Fed is still planning to hike rates in June. The CME Fedwatch tool has the current probability of a rate increase on June 15 at 83.8%.
4. Buyers retreat in iron ore markets: Spot prices for benchmark 62% fines fell by 1.8%, which was its largest drop in almost two weeks. That likely weighed on the Aussie dollar, which briefly climbed above US75 cents but couldn’t find support in overnight trading. In other metals, the higher US dollar saw gold fall back to around $1,250 an ounce, while copper held steady at $2.60 a pound.
5. Oil market stays in the balance: Oil crept higher again, with benchmark crude and West Texas Intermediate (WTI) both up more than 0.5% as the market adopts the consensus view that OPEC will extend its supply cuts through to March 2018. OPEC meets in Vienna on Thursday. Prices fell earlier in the session as it was revealed the Trump administration plans to sell off US oil stockpiles over 10 years to raise government funds. However, the preliminary budget is unlikely to be passed in its current form.
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